FACTORS EFFECT FOR INTERNATIONAL DEVELOPMENTS

 INTERNATIONAL DEVELOPMENTS

1.Global Competition

Companies competing on a global basis will need to use worldclass labor to obtain the quality needed for some product markets. For example, the Dana Corporation uses it  trainingprograms to develop employees who can produce at the level of world competitive standards. One of Dana’s accomplishments has been to develop some of its U.S. workers into world-class machinists.129 One large food manufacturer has obtained specialized world-class information services by having programming done in Mexico and routing work done in England.

Moving foreign nationals across international boundaries is another approach for highly skilled individuals. However, the use of U.S. expatriate workers in overseas holdings may be declining. In some U.S. companies with large overseas holdings, the number of U.S. expatriate workers is relatively small. For example, during one year, Honeywell had 27,15  employees overseas but only approximately 200 were U.S. citizens.130 Instead, there may be a growing tendency to foreign nationals to the United States for a few years’ training with the parent company and having them take on the managerial or professional responsibilities in their countries.

The legal restrictions involved in these actions may be critical. Some large organizations have human resource management specialists who have developed expertise in working through he legalities for such moves.

2.Global Sourcing of Labor

Innovative uses of labor on a global basis are evident. One example is a large U.S. insurance company in which claims are processed in Ireland. The combination of a common language, an educated labor force, a shortage of jobs, and relatively low wages make this an attractive option. As operations have been set up, claims data are sent from the United States using overnight airmail and electronic transmission. An interesting benefit of this relationship is that, in addition to the low cost of labor, there is a time differential advantage as work delivered overnight can be worked on several hours prior to the normal starting time of 8:00 A.M. on the East Coast. Additionally, U.S. companies sometimes have data entry performed offshore in order to take advantage of wage differentials. In some instances, data entry is performed by clerical workers who do not even speak English. For example, American Airlines has data entry performed in China and Barbados.

3.North American Free Trade Agreement

The North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico eliminates tariffs on goods produced in these countries. Canada is the largest trading partner of the United States and Mexico is the second largest. The act is still controversial, with unions claiming the jobs have been lost, while employers and the U.S. Department of Commerce point to job creations. Regardless of the various claims, the effect on trade among the three countries is indisputable because there has been remarkable growth. Trade between the United States and Canada increased by 56 percent during the first four years alone. Even more impressive is that during the same period trade with Mexico increased by 113 percent. In addition, NAFTA has probably helped stimulate interest in broader trade agreements between countries in Area of the Americas that would include many nations.

3.European Community

Access to this huge market has major human resource implications for U.S. companies that have operations in European Community (EC) countries or do business with them. The relaxation of trade rules and the adoption of uniform standards within the EC have produced efficiencies in moving goods and workers across borders that have implications for U.S. operations in Europe. Nonetheless, the European labor environment remains highly unionized, and governmental regulations make it very difficulty to lay off or terminate employees. However, the EC may produce benefits for U.S. operations in Europe through more unified regulations affecting human resources. From another perspective, there also is the possibility of a unified response from a huge market that can affect domestic U.S. operations. For example, the EC was vehement in its attack on the Boeing and McDonnell Douglass merger because of the threat to the EC’s Airbus. For some time, U.S. takeovers of European companies have been viewed as threats to the national identities of Italy, France, and Germany. However, in this instance, the resistance was to a purely U.S. merger.134

References

1. Rutledge, John, and Deborah Allen. Rust to Riches. New York: Harper and Row, 1989.

2. Ibid.

3. Masur, Sandra. “The North American Free Trade Agreement: Why It’s in the Interest of U.S. Business,” Columbia Journal of World Business 26, no.  (1991): 99–103; Flint. “The Myth of U.S. Manufacturing’s Decline,” Forbes (January 18, 1993): 40–42.

4. Aron, Laurie Joan. “Automotive Industry: Searching for Speed,” Site Selection 45, no. 1 (2000): 129.

5. Ibid.

6. Aron. “Automotive Industry: Searching for Speed”; Ball, Jeffrey. “Auto Dealers, Fearing That Detroit Will Hog the Web, FightBack,” Wall Street Journal (May 10, 2000): A1–A12.